Peregrine boss Wasendorf starts serving 50-year jail term

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Published February 28, 2013

| Reuters

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Russell Wasendorf Sr., the former chief executive of Peregrine Financial Group, has begun serving a 50-year sentence at a federal prison in Indiana for bilking $215 million from customers of the failed futures brokerage.

Wasendorf, who turned 65 on Monday, arrived on Wednesday at the U.S. Penitentiary in Terre Haute, Indiana, which was once the home of convicted former Illinois governor George Ryan, according to the Federal Bureau of Prisons.

Now known as Inmate #12191-029, Wasendorf had been locked in a county jail in Cedar Rapids, Iowa, since he confessed in July to stealing from tens of thousands of clients over a period of two decades.

A federal judge in January sentenced Wasendorf, who had tried to kill himself just before the fraud was uncovered last year, to 50 years behind bars, the maximum allowed by law.

Federal marshals transferred Wasendorf to Indiana on a private plane, according to the U.S. Marshals Service, giving him a last taste of the high-flying life he previously enjoyed.

Wasendorf pleaded guilty in September to embezzling more than $100 million, used to fund a life of luxury that included a private jet, extensive wine collection and lakefront condo in Chicago. Prosecutors said the amount stolen was more than $215 million.

The Indiana jail is a "good selection" by prison officials because it is close enough to allow visits from Wasendorf's brother in Iowa, said the former CEO's pastor, Linda Livingston. The brothers had been estranged before Wasendorf's downfall.

However, Wasendorf is not a high-security risk, said Livingston, one of the few people who has had regular contact with him.

"It will be better than where he has been," she said about the federal prison, noting that Wasendorf ached for more human contact after being held in isolation in the county jail.

"He would be delighted to be able to be involved in growing a garden or cooking food in a prison setting," she said.

Livingston said she last saw Wasendorf on his birthday in the county jail and sang to him. She arrived at the jail for a visit on Wednesday and was told he was no longer there.

ESCAPE RISK?

Prison officials considered the severity of Wasendorf's crimes, the length of his sentence, and geography when they assigned him to the prison in Indiana, said Chris Burke, a spokesman for the Federal Bureau of Prisons.

Inmates with longer sentences are often jailed at high-security facilities because they are thought to present a greater risk for escape, he said.

The government also tries to place convicts in prisons within 500 miles of the facilities in which they were previously held.

Wasendorf's life behind bars is tightly controlled. Upon arrival, he was assigned prison-issued khaki-colored pants, a khaki-colored button-up shirt and prison-issued gym shoes and underwear.

He will be expected to work, with potential jobs ranging from cooking in the kitchen to sweeping floors, Burke said.

It's possible he will mix with violent offenders at the facility, which counts 1,501 inmates in its high-security wing.

An administrator at the federal prison did not immediately return a call seeking details about Wasendorf's living conditions.

As regulators closed in on his fraud last year, Wasendorf made a botched suicide attempt outside his $24 million headquarters in Cedar Falls, Iowa, which investigators say was financed with money siphoned from customers.

Peregrine Financial, known as PFGBest, quickly collapsed, and 24,000 former customers are still missing most of the money they had invested with the firm.

(Reporting by Tom Polansek in Chicago; editing by Andrew Hay and Matthew Lewis)